Altria Holds 2021 Annual Meeting of Shareholders

Rhea-AI Summary

Altria Group (NYSE: MO) held its 2021 Annual Meeting of Shareholders, where CEO Billy Gifford reviewed 2020 financial results and 2021 guidance. He reaffirmed adjusted diluted EPS guidance of $4.49 to $4.62, projecting 3% to 6% growth from 2020's $4.36. The meeting resulted in the election of 11 directors and the selection of PricewaterhouseCoopers LLP as the independent accounting firm. Kathryn McQuade was elected as independent Chair of the Board. The full-year EPS guidance accounts for significant investments in non-combustible product development and enhanced consumer engagement efforts.

Positive

• Adjusted diluted EPS guidance for 2021 reaffirmed at $4.49 to $4.62, indicating 3% to 6% growth from 2020.
• Elected 11 directors, ensuring stable governance.
• Appointed Kathryn McQuade as independent Chair of the Board, enhancing corporate governance.

Negative

• None.

Altria Group, Inc. (Altria) (NYSE: MO) held its 2021 Annual Meeting of Shareholders (Annual Meeting) today. During the Annual Meeting, Billy Gifford, Altria’s Chief Executive Officer, summarized Altria’s full-year 2020 and first-quarter 2021 financial results and discussed Altria’s progress towards its Vision of responsibly transitioning adult smokers to a non-combustible future. Mr. Gifford also shared Altria’s corporate responsibility priorities and environmental, social and governance efforts, reaffirmed Altria’s guidance for adjusted diluted earnings per share (EPS) and addressed shareholder questions. Copies of these prepared remarks and business presentation and a replay of the audio webcast of the Annual Meeting are available on altria.com.

Preliminary Voting Results for Altria’s Annual Meeting

The preliminary voting results at the Annual Meeting were as follows: Altria’s shareholders elected to a one-year term each of the 11 nominees for director named in Altria’s proxy statement, ratified the selection of PricewaterhouseCoopers LLP as Altria’s independent registered public accounting firm for 2021, approved, on an advisory basis, the compensation of Altria’s named executive officers and did not approve two shareholder proposals. Final voting results will be reported in a Current Report on Form 8-K that Altria will file with the Securities and Exchange Commission.

Altria’s Independent Chair of the Board

On May 10, 2021, Altria’s Board of Directors (Board) elected Kathryn McQuade, to serve as Altria’s independent Chair of the Board. The appointment became effective today, following the conclusion of the Annual Meeting.

2021 Full-Year Guidance

In his remarks, Mr. Gifford reaffirmed Altria’s guidance for 2021 full-year adjusted diluted EPS to be in a range of $4.49 to $4.62, representing a growth rate of 3% to 6% from an adjusted diluted EPS base of $4.36 in 2020.

Altria’s 2021 full-year adjusted diluted EPS guidance range includes planned investments in support of its Vision, such as (i) marketplace investments to expand the availability and awareness of Altria’s non-combustible products, (ii) costs associated with building an industry-leading consumer engagement platform that enhances data collection and insights in support of adult tobacco consumer conversion to non-combustible products and (iii) increased non-combustible product research and development expense. Altria expects 2021 adjusted diluted EPS growth in the last three quarters of the year.

Altria’s full-year adjusted diluted EPS guidance excludes the impact of certain income and expense items that management believes are not part of underlying operations. These items may include, for example, loss on early extinguishment of debt, restructuring charges, asset impairment charges, acquisition-related costs, COVID-19 special items, equity investment-related special items (including any changes in fair value of the equity investment and any related warrants and preemptive rights), certain tax items, charges associated with tobacco and health litigation items, and resolutions of certain nonparticipating manufacturer (NPM) adjustment disputes under the 1998 Master Settlement Agreement (such dispute resolutions are referred to as NPM Adjustment Items).

Altria’s management cannot estimate on a forward-looking basis the impact of certain income and expense items, including those items noted in the preceding paragraph, on its reported diluted EPS because these items, which could be significant, may be unusual or infrequent, are difficult to predict and may be highly variable. As a result, Altria does not provide a corresponding U.S. generally accepted accounting principles (GAAP) measure for, or reconciliation to, its adjusted diluted EPS guidance.

Regular Quarterly Dividend

Following the Annual Meeting, Altria’s Board declared a regular quarterly dividend of $0.86 per share, payable on July 9, 2021, to shareholders of record as of June 15, 2021. The ex-dividend date is June 14, 2021. Future dividend payments remain subject to the discretion of Altria’s Board.

Altria’s Profile

Altria has a leading portfolio of tobacco products for U.S. tobacco consumers age 21+. Altria’s Vision through 2030 is to responsibly lead the transition of adult smokers to a non-combustible future (Vision). Altria is Moving Beyond Smoking™, leading the way in moving adult smokers away from cigarettes by taking action to transition millions to potentially less harmful choices - believing it is a substantial opportunity for adult tobacco consumers, Altria’s businesses and society.

Altria’s wholly owned subsidiaries include the most profitable tobacco companies in their categories: Philip Morris USA Inc. (PM USA), U.S. Smokeless Tobacco Company LLC (USSTC) and John Middleton Co. (Middleton). Altria’s non-combustible portfolio includes ownership of Helix Innovations LLC (Helix), the maker of on! oral nicotine pouches, exclusive U.S. commercialization rights to the IQOS Tobacco Heating System® and Marlboro HeatSticks®, and an equity investment in JUUL Labs, Inc. (JUUL).

Altria complements its tobacco portfolio with ownership of Ste. Michelle Wine Estates (Ste. Michelle) and equity investments in Anheuser-Busch InBev SA/NV (ABI), the world’s largest brewer, and Cronos Group Inc. (Cronos), a leading Canadian cannabinoid company.

The brand portfolios of Altria’s tobacco operating companies include Marlboro®, Black & Mild®, Copenhagen®, Skoal® and on!®. Ste. Michelle produces and markets premium wines sold under various labels, including Chateau Ste. Michelle®, 14 Hands® and Stag’s Leap Wine Cellars™, and it imports and markets Antinori® and Champagne Nicolas Feuillatte™ products in the United States. Trademarks and service marks related to Altria referenced in this release are the property of Altria or its subsidiaries or are used with permission.

Learn more about Altria at www.altria.com and follow us on Twitter, Facebook and LinkedIn.

Forward Looking and Cautionary Statements

This release contains projections of future results and other forward-looking statements that involve a number of risks and uncertainties and are made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995.

Important factors that may cause actual results and outcomes to differ materially from those contained in the projections and forward-looking statements included in this release are described in Altria’s publicly filed reports, including its Annual Report on Form 10-K for the year ended December 31, 2020 and its Quarterly Report on Form 10-Q for the quarter ended March 31, 2021. These factors include the following:

• unfavorable litigation outcomes, including risks associated with adverse jury and judicial determinations, courts and arbitrators reaching conclusions at variance with our, our subsidiaries’ or our investees’ understanding of applicable law, bonding requirements in the jurisdictions that do not limit the dollar amount of appeal bonds, and certain challenges to bond cap statutes;
• government (including the U.S. Food and Drug Administration (FDA)) and private sector actions that impact adult tobacco consumer acceptability of, or access to, tobacco products;
• tobacco product taxation, including lower tobacco product consumption levels and potential shifts in adult consumer purchases as a result of federal, state and local excise tax increases;
• unfavorable outcomes of any government investigations of Altria, our subsidiaries or investees;
• a successful challenge to our tax positions or an increase to the corporate income tax rate;
• the risks related to our and our investees’ international business operations, including failure to prevent violations of various U.S. and foreign laws and regulations such as foreign privacy laws and laws prohibiting bribery and corruption;
• the risks associated with health epidemics and pandemics, including the COVID-19 pandemic and similar outbreaks, such as their impact on our financial performance and financial condition and on our subsidiaries’ and investees’ ability to continue manufacturing and distributing products, and the impact of health epidemics and pandemics on general economic conditions (including any resulting recession or other economic crisis) and, in turn, adult consumer purchasing behavior, which may be further impacted by any changes in government stimulus or unemployment payments;
• the failure of our tobacco and wine subsidiaries and our investees to compete effectively in their respective markets;
• the growth of the e-vapor category and other innovative tobacco products, including oral nicotine pouches, contributing to reductions in cigarette and MST consumption levels and sales volume;
• our tobacco and wine subsidiaries’ and our investees’ continued ability to promote brand equity successfully; to anticipate and respond to evolving adult consumer preferences; to develop, manufacture, market and distribute products that appeal to adult consumers (including, where appropriate, through arrangements with, and investments in third parties); to improve productivity; and to protect or enhance margins through cost savings and price increases;
• changes, including in economic conditions (due to the COVID-19 pandemic or otherwise), that result in adult consumers choosing lower-priced brands, including discount brands;
• the unsuccessful commercialization of adjacent products or processes by our tobacco subsidiaries and investees, including innovative tobacco products that may reduce the health risks associated with cigarettes and other traditional tobacco products, and that appeal to adult tobacco consumers;
• significant changes in price, availability or quality of tobacco, other raw materials or component parts, including as a result of the COVID-19 pandemic;
• the risks related to the reliance by our tobacco and wine subsidiaries on a few significant facilities and a small number of key suppliers, distributors and distribution chain service providers, and the risk of an extended disruption at a facility of, or of service by, a supplier, distributor or distribution chain service provider of our tobacco or wine subsidiaries or investees, including as a result of the COVID-19 pandemic;
• required or voluntary product recalls as a result of various circumstances such as product contamination or FDA or other regulatory action;
• the failure of our information systems or service providers’ information systems to function as intended, or cyber-attacks or security breaches;
• our inability to attract and retain the best talent due to the impact of decreasing social acceptance of tobacco usage, tobacco control actions; and other factors;
• impairment losses as a result of the write down of intangible assets, including goodwill;
• the risks related to Ste. Michelle’s wine business, including competition, unfavorable changes in grape supply, and changes in adult consumer preferences that have resulted and may continue to result in increased inventory levels and inventory write offs, and governmental regulations;
• the adverse effect of acquisitions, investments, dispositions or other events on our credit rating;
• our inability to acquire attractive businesses or make attractive investments on favorable terms, or at all, or to realize the anticipated benefits from an acquisition or investment and our inability to dispose of businesses or investments on favorable terms or at all;
• the risks related to disruption and uncertainty in the credit and capital markets, including risk of access to these markets both generally and at current prevailing rates, which may adversely affect our earnings or dividend rate or both;
• our inability to attract and retain investors due to the impact of decreasing social acceptance of tobacco usage or unfavorable ESG ratings;
• the risk that any challenge to our investment in JUUL, if successful, could result in a broad range of resolutions including divestiture of the investment or rescission of the transaction;
• the risks generally related to our investments in JUUL and Cronos, including our inability to realize the expected benefits of our investments in the expected time frames, or at all, due to the risks encountered by our investees in their businesses, such as operational, competitive, compliance, legislative and regulatory risks at the international, federal, state and local levels, including actions by the FDA, and adverse publicity; potential disruptions to our investees’ management or current or future plans and operations; domestic or international litigation developments, government investigations, tax disputes or otherwise; and impairment of our investment in Cronos and changes in the fair value of our investment in JUUL;
• the risks related to our inability to acquire a controlling interest in JUUL as a result of standstill restrictions or to control the material decisions of JUUL, restrictions on our ability to sell or otherwise transfer our shares of JUUL until December 20, 2024, and non-competition restrictions for the same time period subject to certain exceptions;
• the adverse effects of risks encountered by ABI in its business, including effects of the COVID-19 pandemic, foreign currency exchange rates and the impact of movements in ABI’s stock price on our equity investment in ABI, including on our reported earnings from and carrying value of our investment in ABI, which could result in impairment of our investment, and the dividends paid by ABI on the shares we own;
• the risks related to our inability to transfer our equity securities in ABI until October 10, 2021, and, if our ownership percentage decreases below certain levels, the adverse effects of additional tax liabilities, a reduction in the number of directors that we have the right to have appointed to the ABI board of directors, and our potential inability to use the equity method of accounting for our investment in ABI;
• the risk of challenges to the tax treatment of the consideration we received in the ABI/SABMiller business combination and the tax treatment of our equity investment; and
• the risks, including criminal, civil or tax liability for Altria, related to Altria’s or Cronos’s failure to comply with applicable laws, including cannabis laws.

Altria cautions that the foregoing list of important factors is not complete and does not undertake to update any forward-looking statements that it may make except as required by applicable law. All subsequent written and oral forward-looking statements attributable to Altria or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements referenced above.

Schedule 1

ALTRIA GROUP, INC. and Subsidiaries Reconciliation of GAAP and non-GAAP Measures (dollars in millions, except per share data) (Unaudited)
Reconciliation of Altria’s Full Year 2020 Adjusted Results
	Earnings before Income Taxes				Provision for Income Taxes				Net Earnings				Net Earnings Attributable to Altria				Diluted EPS
For the year ended December 31, 2020
2020 Reported	$	6,890			$	2,436			$	4,454			$	4,467			$	2.40
NPM Adjustment Items	4				1				3				3				—
Asset impairment, exit, implementation and acquisition-related costs	431				89				342				342				0.18
Tobacco and health litigation items	83				21				62				62				0.03
JUUL changes in fair value	(100		)		—				(100		)		(100		)		(0.05		)
Impairment of JUUL equity securities	2,600				—				2,600				2,600				1.40
ABI-related special items	763				160				603				603				0.32
Cronos-related special items	51				(2		)		53				53				0.03
COVID-19 special items	50				13				37				37				0.02
Tax items	—				(50		)		50				50				0.03
2020 Adjusted for Special Items	$	10,772			$	2,668			$	8,104			$	8,117			$	4.36

Altria reports its financial results in accordance with GAAP. Altria’s management also reviews certain financial results, including diluted EPS, on an adjusted basis, which excludes certain income and expense items, including those items noted under “2021 Full-Year Guidance.” Altria’s management does not view any of these special items to be part of Altria’s underlying results as they may be highly variable, may be unusual or infrequent, are difficult to predict and can distort underlying business trends and results. Altria’s management believes that adjusted financial measures provide useful additional insight into underlying business trends and results and provide a more meaningful comparison of year-over-year results. Altria’s management uses adjusted financial measures for planning, forecasting and evaluating business and financial performance, including allocating resources and evaluating results relative to employee compensation targets. These adjusted financial measures are not consistent with GAAP and may not be calculated the same as similarly titled measures used by other companies. These adjusted financial measures should thus be considered as supplemental in nature and not considered in isolation or as a substitute for the related financial information prepared in accordance with GAAP.

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FAQ

What is Altria's adjusted diluted EPS guidance for 2021?

Altria's adjusted diluted EPS guidance for 2021 is between $4.49 and $4.62.

Who was elected as Altria's independent Chair of the Board?

Kathryn McQuade was elected as Altria's independent Chair of the Board during the Annual Meeting.

What were the preliminary voting results from Altria's Annual Meeting?

Shareholders elected 11 directors and ratified PricewaterhouseCoopers LLP as the independent accounting firm for 2021.

How did Altria's CEO summarize the company's financial results?

CEO Billy Gifford summarized Altria's 2020 performance and discussed progress towards a non-combustible future.